RIL refining margins surge in Q3

Petrochemicals giant Reliance Industries (RIL) has posted operating profit margin (OPM) of 11.76 per cent in its refining and marketing business in the quarter ended December 2004, compared with 8.16 per cent in the same quarter of last year.

This is the highest-ever operating margin that the company has reported in the last nine quarters between December 2002 and December 2004.

The company attributes the high margins to a surge in gross refining margins at $9.8 a barrel during the quarter ended December 2004 from $8.20 a barrel in the quarter ended December 2003.

The company's gross refining margins were at $6.5 a barrel in December 2002. The retailing of petroleum business, which is getting into position with 280 retail stations already commissioned, has further helped refining margins.

The refining segment includes production and marketing operations of the petroleum refinery.

The operating profit margin in the refining business has been rising since September 2003: from 7.78 per cent in September 2003 to 9.06 per cent in March 2004 and 9.62 per cent in September 2004.

However, the petrochemical business, which accounted for 44.34 per cent of RIL turnover in the December 2004 quarter, registered a decline in operating profit margins.

The petrochemicals margins dipped to a eight quarter low of 7.73 per cent in the quarter ended December 2004 compared to a healthy 11.96 per cent in the quarter ended December 2003. Margins were the lowest in March 2003 quarter at 4.80 per cent when the petrochemicals business faced a downturn.

The lower margins in petrochemicals business were largely on account of a higher cost of raw materials, particularly naphtha compared with its products prices.

The prices of polyethylene (PE) rose 32.1 per cent, polypropylene by 27.5 per cent and polyvinyl chloride (PVC) rose 20 per cent in the quarter ended December 2004. The prices of purified terephthalic (PTA) jumped 42.5 per cent while that of MEG rose 53.3 per cent.

Petrochemicals margins remained over 11 per cent between September 2003 and March 2004, with highest being at 11.96 per cent during the quarter ended December 2003.

The company had reported a single-digit OPM in petrochemicals business in three of the last nine quarter including the quarter under review.